Calvalley Petroleum - 2008 Second Quarter Results



    Calvalley Petroleum Inc., (TSX: CVI.A)

    CALGARY, Aug. 6 /CNW/ - Calvalley Petroleum Inc. (the "Company" or
"Calvalley"), an international junior oil and gas company based in Calgary,
Alberta, is pleased to announce its financial and operating results for the
second quarter ended June 30, 2008.

    
    HIGHLIGHTS

    Financial
    -------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                       June 30                   June 30
                                 --------------------------------------------
    (in thousands of dollars)       2008        2007        2008        2007
    -------------------------------------------------------------------------

    Revenue from crude oil sales  16,018       1,034      28,664      11,916
    Volume of crude oil sales
     (mbbls)                         130          14         254         194
    EBITDA                        11,587        (312)     20,942       6,557
    Operating income               8,810        (499)     15,388       3,901
    Net income (loss)              4,432         889      10,031       5,071
    Capital expenditures           9,493       9,037      16,852      15,498
    Funds flow from operations    10,266       2,474      18,667       9,338
    Funds flow from operating
     activities                   34,061       8,231      34,370       4,032
    -------------------------------------------------------------------------


    -   Calvalley's revenue from crude oil sales was $16.0 million for the
        second quarter ended June 30, 2008 (2007 - $1.0 million). The large
        increase was due to the timing of crude oil sales in 2007. Revenue
        for the six month period was $28.7 million versus $11.9 million in
        2007.

    -   Net income was $4.4 million for the three months June 30, 2008, as
        compared to $0.9 million for the same period of 2007. The increase to
        the crude oil sales revenue during the first quarter reflected the
        strong average price of US$123.60 per barrel as compared to $71.21
        per barrel for the second quarters of 2008 and 2007 respectively.

    -   Funds flow from operations was $10.3 million for the three months
        ended June 30, 2008, as compared to $9.3 million for the same period
        of 2007. Funds flow from operations for the six month period was
        $18.7 million versus $9.3 million for 2007.

    -   Calvalley continues to be well financed and capitalized with no
        outstanding debt and working capital of $75.2 million.


    Operating
    -------------------------------------------------------------------------
                                                         Three months ended
                                                       ----------------------
                                                          June 30,   June 30,
    (barrels of oil per day)                                2008       2007
    -------------------------------------------------------------------------

    Total Block 9 production                               4,759       5,135

    Calvalley working interest (50.0%)                     2,380       2,568

    Calvalley net entitlement (31.3%)                      1,489       1,607
    -------------------------------------------------------------------------


    -   Average daily production from the Block 9 for the three months ended
        June 30, 2008 was 4,759 gross barrels per day (Calvalley working
        interest 2,380 bopd), up from the previous quarter's average of
        4,602 bopd (2,301 bopd working interest share) and down from
        5,135 bopd (2,568 bopd working interest share) for the second quarter
        of 2007. The increase from the first quarter was due to the
        completion of pressure testing and maintenance activities but was
        lower than the same period in 2007 due to a temporary shortage of
        pumps for wells requiring pump replacements, and limited crude
        processing capacity. Production continues to be constrained due to
        solution gas handling capacity at the temporary production facility.

    -   Construction of the Central Processing Facility ("CPF") is nearing
        completion. Final commissioning of the CPF is expected in October
        following the completion of the Fire Fighting Unit at the facility
        and a full test of the facility's operations.

    -   Production testing of the Malik-2 and Qarn Qaymah-2 wells continued
        through the quarter. We expect to have full test results by the end
        of the third quarter.

    -   Calvalley has commenced preparatory work for a 3D seismic data
        acquisition covering 126 km(2) over the Qarn Qaymah Structure.

    -   Technical work associated with two deep wells (Rashedah and South
        Qarn Qaymah) targeting multiple horizons including the fractured
        basement have been completed. Both wells are expected to be drilled
        in the second half of 2008. Calvalley has commenced construction of a
        heavy crude blending facility, which will enable the Company to
        produce from the currently shut-in Al Roidhat field. Design work and
        equipment specification and tendering have begun for water-injection
        and gas re-injection facilities at the Hiswah Field for pressure
        maintenance and gas conservation.

    -   Engineering and preparation work associated with the construction of
        the main pipeline is progressing as planned. The Company expects to
        commence construction by year end.
    

    Filing of Reports on SEDAR

    Calvalley's Management's Discussion and Analysis and Unaudited Financial
Statements for the quarter ended June 30, 2008 can be found for viewing by
electronic means on The System for Electronic Document Analysis and Retrieval
at www.sedar.com.
    Calvalley is listed on the Toronto Stock Exchange, trading under the
symbol "CVI.A".

    THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
    RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

    This press release may contain forward-looking statements including,
without limitation, financial and business prospects and financial outlooks,
and such statements may be forward-looking statements which reflect
management's expectations regarding future plans and intentions, growth,
results of operations, performance and business prospects and opportunities.
Words such as "may", "will", "should", "could", "anticipate", "believe",
"expect", "intend", "plan", "potential", "continue", and similar expressions
have been used to identify these forward-looking statements. These statements
reflect management's current beliefs and are based on information currently
available to management. Forward-looking statements involve significant risk
and uncertainties. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking statements
including, but not limited to, changes in general economic and market
conditions and other risk factors. Although the forward-looking statements
contained herein are based upon what management believes to be reasonable
assumptions, management cannot assure that actual results will be consistent
with these forward-looking statements. Investors should not place undue
reliance on forward-looking statements. These forward-looking statements are
made as of the date hereof.
    Forward-looking statements and other information contained herein
concerning the oil and gas industry and Calvalley's general expectations
concerning this industry are based on estimates prepared by management using
data from publicly available industry sources as well as from reserve reports,
market research and industry analysis and on assumptions based on data and
knowledge of this industry which Calvalley believes to be reasonable. However,
this data is inherently imprecise, although generally indicative of relative
market positions, market shares and performance characteristics. While
Calvalley is not aware of any misstatements regarding any industry data
presented herein, the industry involves risks and uncertainties and is subject
to change based on various factors.

    %SEDAR: 00001745E




For further information:

For further information: investorrelations@calvalleypetroleum.com,
Edmund Shimoon, CEO, Memet Kont, COO, Bill Cummins, CFO, (403) 297-0490

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